I noticed that I was constantly giving my friends advice on just some basics about their money and future. So I am certain that my gals were not the only ones out there who could use a little guidance on that so here are my top Do’s and Don’ts for your financial breakthrough!
- DO check your credit report from all 3 credit reporting agencies. (Transunion, Equifax and Experian). You are allowed a free copy (once a year) of your credit report from each agency. Check out www.annualcreditreport.com to get your free copy. Make sure that you are by a printer to print out your report when you’re ready to retrieve because you will not be allowed to go back to the site to obtain the report once you’ve already retrieved it.
- DO sign up for Score Watch ®on www.myfico.com. For about $20 a month (ladies this is the best $20 you can spend a month, remember it’s an investment in you), Score Watch® monitors your credit report daily and your FICO® score weekly. You get email notifications of any changes to your FICO score or credit report.
- DON’T try to “keep up with the Joneses”. I don’t know who they are but I sure know that it can be tempting to try and keep up. In today’s society, where we tend to define ourselves by our careers, financial status, cars or latest designer bag; it can be tempting to want to splurge in order to impress but do not get caught up in the hype! Stay true to yourself and by all means, treat yourself from time to time but be wise about it. Shop discount sites, look for sample sales, and explore new options that can be easier on your wallet.
- DO try and save at least 10% of your earnings for every paycheck. Yes, 10%. Try getting those savings automatically transferred into a high-yield savings account. Try www.hsbc.com for an online savings account or www.ingdirect.com – these institutions tend to have attractive interest rates. Do make sure the bank you choose is a member of the FDIC. The Federal Deposit Insurance Corporation (FDIC) is an independent agency, implemented by the US Congress to guarantee the safety of depositing your money with that financial institution. Therefore, the FDIC just ensures that your money is safe.
- DO have an emergency fund. With today’s economy and tough job-market, it is imperative for each you to have an emergency fund. Fact is, that are jobs are no longer guaranteed and finding another may not happen immediately. So add up your monthly expenses and multiply that by 6 – that amount should be the minimal target amount of money that you should have saved for a rainy day.
- DON’T pass up on investing in your 401K! Ladies, I understand that retirement seems like eons away for some of us, but it’s super important to start preparing now. The earlier you start; the better off you will be in your “golden years”. As many of you already know, a 401K is a retirement savings account that allows a worker to save for retirement and have the savings invested while deferring current income taxes on the saved money and earnings until withdrawal – so this is tax-deferred money. In most cases, your employer will match your contribution to you 401k – yes, free money! So you should at least contribute enough to qualify for the company match. For my gals who work for themselves, you still have retirement account options like a Roth IRA which you can contribute up to $5,000 a year. A Roth IRA provides tax-free growth and tax free withdrawals as opposed to a 401K or traditional IRA. For more information on retirement savings, please feel free to check out the Resource Center at www.suzeorman.com
- Do read the following books by the one and only Suze Orman “Young, Fabulous and Broke” and “Women and Money” – you will indeed thank me later. Suze has a way of talking financial independence that’s empowering, informative and you can actually understand what she’s saying! She breaks down everything in the plain English; not that finance lingo that leaves us all with nothing but a headache.
- DON’T live in the blind about you and your family’s finances. Ok gals, I know this might be a sticky situation from some of us but it is vital that we are “in the know” about the state of our family’s expenses. How many times have we heard the stories of women allowing their spouses or significant others to manage all the finances only to learn later that things were not handled appropriately and now the house is in foreclosure or you’re in $145,000 worth of debt? When living with someone, whether it is a spouse, friend, boyfriend, or partner, you must know what’s going on with the finances. This should be a shared responsibility and not something that we give for someone else to do for us. I know this can be a tough conversation to have so try bringing it up casually over dinner so the other does not feel like he or she is not trustworthy. Let that person know that you want to be accountable for your finances too and let he or she know that it’s unfair for only one person to be responsible for the household’s finances. Make it a team effort!